While asking to impound bank accounts of two high-level employees of Infosys Ltd and Wipro Ltd, market regulator Securities and Exchange Board of India (SEBI) barred both these executives from markets until further orders for insider trading in shares Infosys. According to the market regulator, insider trading took place when Infosys announced a partnership with Vanguard.
In an ex-parte order, Madhabi Puri Buch, whole-time member (WTM) of SEBI
says, “Ramit Chaudhri (solution design head, Infosys) and Keyur Maniar (senior vice president for capital markets at Wipro) are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders. The bank accounts of Mr Chaudhri and Mr Maniar to the extent of amount (Rs2.62 crore) mentioned in table no. 8 at paragraph 48 above is impounded.”
SEBI’s interim order proceeds based on ‘delta analysis’ of the trading by these insiders, call logs of telephone communication between the Infosys and Wipro employees, and internal email correspondences at Infosys about the deal.
The investigation by the market regulator found the high-level employee, who was solution design head Infosys, at the appropriate time, and in the know of the deal, communicated the UPSI to an employee of Wipro, who after that traded in the scrip of Infosys, both during pre and post-deal announcement and is made gains of about Rs2.62 crore.
Mentioning records on LinkedIn profile pages, the order also notes that Mr Chaudhri and Mr Maniar have worked together in Wipro BPS from March 2012 to December 2014.
Interestingly, while Mr Chaudhari, as a team member at Infosys, knew about the Vanguard deal, Mr Maniar, on the other hand, was designated person at Wipro for the same deal. Both Infosys and Wipro were the final contenders for getting the Vanguard deal.
In an email on 1 February 2021, Wipro informed SEBI that Keyur Maniar was categorised as a designated person for the Vanguard deal. Infosys, however, contended the information related to the Vanguard deal was no UPSI.
In its emails on 22nd February and 16 March 2021, Infosys stated, “the ‘partnership’ was neither a joint venture nor an acquisition of an entity and accordingly this transaction was not considered as a UPSI of the company and information is not forming part of the structured digital database maintained by the company.”
Ms Buch, the WTM of SEBI, however, rejected the contention. “In view of prima facie findings mentioned from paragraph 9 to 27, the submission of Infosys cannot be accepted in the present matter as the information relating to ‘the strategic partnership between Infosys and Vanguard’ satisfies all the three parameters of the definition of UPSI given under regulation 2(1)(n) of Prohibition of Insider Trading (PIT) Regulations,” she says in the order.
The order also observes, “It may be noted, whether an information is a UPSI needs to be determined on the basis of the parameters mentioned in the PIT Regulations and not on the basis of whether such information has been recorded in the structured digital database (SDD) of the company.”
SEBI also decisively relied on a long duration call made by the senior employee of Infosys to his Wipro counterpart a week before the deal announcement.
In its interim order, SEBI concluded based on ‘preponderance of probability that the Wipro executive is guilty of insider trading, based on information he received from his acquaintance in Infosys.
Finding this as a fit case for ex-parte order on the reasonable belief, SEBI says, “both Mr Chaudhri and Mr Maniar would replicate the same ‘modus operandi’ in other listed companies.”